As more businesses turn to digital assets for payments, banks should pay careful attention.
"I can't stress enough how much of a threat [that] crypto within B2B poses to bank's payments revenues," Joel Hugentobler, an analyst who focuses on digital assets and cryptocurrency for Javelin Strategy & Research, wrote in an email. "It's straightforward: most cryptocurrencies boast near instantaneous settlement with far lower fees."
Banks face various threats related to the growth of digital assets within B2B. They might lose out on credit card revenue and wire charges, for instance, as crypto gains prominence, says Tony DeSanctis, senior director in the payments practice at Cornerstone Advisors. There's also a risk for banks that participate in cross-border payments. While cross-border payments are not a huge revenue generator for many institutions, there could be some disruption, he said.
Also, assuming crypto becomes more adopted as a B2B option—and there's already some momentum in this direction—there will be less money to be made from ACH transactions and businesses may keep fewer deposits in bank accounts. In particular, if stablecoins—a type of cryptocurrency whose value is pegged to another asset, such as a fiat currency or gold, to maintain a stable price—take off, you'd see a drop in deposits in bank accounts.
"The more your entire lifecycle can be only crypto, the less that I ever have to touch my bank account," said Pat White, chief executive and co-founder of Bitwave, which offers B2B crypto payment management. It follows that if deposits go down, other parts of the bank relationship, including lending, are also at risk. "The relationship becomes more and more transactional," White added.
To be sure, digital assets aren't close to dethroning ACH as the top B2B payment method. ACH was expected to account for 47.9% of U.S. B2B payment transaction value in 2024, according to Insider Intelligence's eMarketer Forecast from August 2023. That was followed by checks and cash at 32.1%. Cards were predicted to make up 6.7% of the transaction value.
"ACH is still the number one debit option because it's minimal cost and you get cash right away," said Jeff Fortney, senior associate at TSG.
At this point, large businesses are primarily the ones exploring or adding the option for crypto for B2B transactions. Specifically, many businesses, including PayPal, Google Cloud and EY are looking at the use of stablecoins, which settle instantly, are borderless, and can offer rewards to holders, improving workflows for companies and their vendors, according to Coinbase.